Lawmakers debate how to spend extra revenue

SACRAMENTO (AP) — California schools are expecting a boost from the $900 million to be raised over the next year through the closure of a corporate tax loophole, but Gov. Jerry Brown is locked in a disagreement with state lawmakers over how to hand out that money.

Half the money that will be generated after voters overwhelmingly approved Proposition 39 last year is dedicated to energy-efficiency projects at schools. Democrats in the state Legislature are trying to persuade the governor on how best to distribute the $450 million.

The Democratic governor, who will release his revised state budget plan on Tuesday, has called for distributing the energy project funds to school districts based on the number of students enrolled. Bills pending in the Assembly and Senate would make the process more competitive, placing a priority on poorer schools, those in more extreme climates and those with older, energy-wasting buildings.

Directing the dollars toward the neediest districts and their projects will provide the greatest economic effect, said Sen. Kevin de Leon, D-Los Angeles, co-chairman of last November's ballot initiative effort with billionaire investor and philanthropist Tom Steyer. By reducing energy costs, districts with overinflated utility bills then can use their savings to boost classroom spending, he said.

"By spreading it across the board like peanut butter, I'm not sure how all schools can benefit," de Leon said of the governor's approach.

Both his measure, SB39, and a similar bill, AB39, by Assemblywoman Nancy Skinner, D-Berkeley, also would create a revolving loan fund so that the dollars could continue to be invested starting in five years, when half the money will no longer be earmarked for energy projects.

H.D. Palmer, the governor's finance spokesman, said the administration sees a statewide need for the new dollars, but acknowledged there are concerns about Brown's proposal.

Asked whether the governor will revise in approach in Tuesday's budget, Palmer said the administration "may have more to say on the subject" then.

The California School Boards Association supports Brown's approach, which it says would allow districts to start spending the money and begin projects sooner than the proposals before the Legislature. CSBA spokesman Dennis Meyers said school districts are better able to assess their schools' energy priorities than state officials.

De Leon said he believes the money could be out to school districts by early next year under either approach but emphasized that the projects should be carefully reviewed to ensure money is being spent effectively.

Steyer, who provided most of the financial backing for last year's initiative campaign, supports de Leon's bill. He said in a statement that he is confident "the Legislature and governor will do their job to ensure these funds are used in a way that keeps our promise to voters, while creating green jobs, maximizing bang for the buck and making a measurable difference for schools."

As lawmakers and the governor wrangle over the funding for energy projects, Assembly Speaker John Perez, D-Los Angeles, is eyeing the remaining money, which he wants to use to resurrect his proposal to offer college scholarships to middle-class students.

Steyer has not weighed in publicly on how he'd like to see the non-energy funds spent. The governor's plan does not tie the money to a specific program, instead directing the money to the state's general fund, and neither of the pending bills addresses the other $450 million.

Perez said last week that he will seek to use the money to provide college scholarships for students whose families earn less than $150,000 a year.

"We still believe it's the greatest investment we can make for long-term expansion of the middle-class and productivity in the state of California," Perez said. "We have huge support for it in both chambers and publicly."

Perez's proposal, which could be included in the state budget the Legislature takes up this summer, is a scaled-down version of a failed plan he pushed last year.

That plan would have cut tuition at state public universities by more than half for about 200,000 college students. It passed the Assembly, but died in the Senate.

Perez is now proposing to provide scholarships for up to 40 percent of tuition costs, which would slash costs at University of California system campuses by nearly $5,000 per year and by about $2,200 a year at California State University system schools.